News That Matters

Ft.com
North Korea agreed on Wednesday to suspend nuclear tests, long-range missile launches and its activities at a key nuclear facility in an announcement that represents a surprise breakthrough for nuclear diplomacy, http://ftalphaville.ft.com/thecut/2012/03/01/905291/n-korea-agrees-to-suspend-nuclear-tests/

Fannie Mae, the US government-controlled mortgage financier, will ask taxpayers for another $4.6bn after recording a $2.4bn loss last quarter, the company has said. The FT reports the latest appeal brings its total request from the US Treasury to $116bn, http://ftalphaville.ft.com/thecut/2012/03/01/905161/fannie-mae-to-ask-treasury-for-4-6bn-more/

Apple will probably start paying a dividend this year, Bloomberg says, based on the news agency’s own data and projections which forecast a quarterly dividend of about $2 a share before 2013. The projections are based in part on the dividends paid by other large technology providers, http://ftalphaville.ft.com/thecut/2012/03/01/905131/apple-dividend-predicted/

Malaysian Air, the nation’s largest long-haul carrier, reported a fourth straight quarterly loss on rising fuel costs and provisions for returning leased aircraft early, reports Bloomberg. The net loss of 1.28bn ringgit ($426m) in the three months ended in December compared with a profit of 225.9m ringgit a year earlier,http://ftalphaville.ft.com/thecut/2012/03/01/905031/malaysian-air-in-crisis-after-big-loss/

Federal Reserve chairman Ben Bernanke offered a tempered view of the US economy on Wednesday, says Reuters, pouring cold water on the notion that recent upbeat signs herald a stronger recovery. Mr Bernanke told Congress that unless growth accelerated, http://ftalphaville.ft.com/thecut/2012/03/01/904991/bernanke-downbeat-on-economy/

The head of Germany’s Bundesbank has launched a powerful attack on Mario Draghi, president of the ECB, the FT reports. Jens Weidmann’s warning of increasing risk stemming from some ECB policies highlights http://ftalphaville.ft.com/thecut/2012/03/01/904841/bundesbank-critical-of-ecb-loans/

Chinese manufacturing growth sped up last month, powered by a rise in export orders as global economic conditions improved, according to the official purchasing managers’ survey. The FT reports the official PMI rose to 51.0 in February from 50.5 in January, http://ftalphaville.ft.com/thecut/2012/03/01/904851/increased-export-orders-lift-china-pmi/

Eight hundred European banks borrowed €529.5bn in three-year liquidity from the European Central Bank in the last LTRO, the FT reports. More than half of the banks tapping funds came from Germany, according to people familiar with the auction. http://ftalphaville.ft.com/thecut/2012/02/29/904711/european-banks-tap-e530bn-in-ecb-loans/

Japan is “in the final stages” of talks with the US on a deal to make deeper cuts to its Iranian oil imports, its foreign minister has said, according to the FT. A deal to reduce reliance on Iran’s crude would be made in return for Japanese banks avoiding tough US sanctions on dealings with Iranian financial institutions.http://ftalphaville.ft.com/thecut/2012/02/29/904651/iran-oil-in-asia-japan-close-to-import-cut-deal-logistics-loom/

The Federal Reserve’s Beige Book has reported an unexciting but continuing pace of growth in the US since the beginning of the year, Bloomberg reports. “Manufacturing continued to expand at a steady pace across the nation,” the Fed survey added. http://ftalphaville.ft.com/thecut/2012/02/29/904611/fed-modest-to-moderate-us-growth/

Inside the MixMax exhibition hall in Krasnoyarsk, an industrial city in the heart of Siberia, more than 1,000 students are applauding the arrival of Mikhail Prokhorov, the Russian billionaire turned presidential candidate. As a laser show flickers from depicting the tycoon’s face, to the Russian map and flag and back to his face again, Mr Prokhorov, at 6 foot 8, towers calmly on the stage and prepares to launch into a nearly two-hour question and answer session. Behind him a slogan reads “Demand more!”http://www.ft.com/intl/cms/s/0/68b6de08-62e6-11e1-9445-00144feabdc0.html#axzz1nkNpHEL1

Wsj.com
Asian stock markets were mixed Thursday as renewed confidence in China’s manufacturing activity was offset by Federal Reserve Chairman Ben Bernanke’s cautious remarks on the U.S. economy.  Japan’s Nikkei Stock Average turned lower after rising over 1% in the morning, as investors booked profits as the yen started to recover some of its losses against the U.S. dollar; the index was recently off 0.4%, Australia’s S&P/ASX 200 was down 0.7%, while Hong Kong’s Hang Seng Index fell 0.3%. China’s Shanghai Composite was up 0.1% and India’s Sensex was off 1.2%. South Korean markets were shut for a holiday.  Dow Jones Industrial Average futures were down 10 points in screen trade.http://online.wsj.com/article/SB10001424052970203986604577254101013641574.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews

Syrian troops massed around a rebel-held neighborhood of Homs on Wednesday, raising fears that the government was preparing an all-out ground assault there, as Damascus thwarted efforts by the U.N.’s top humanitarian official to gain entry to the country. “Baba Amr will be under…complete control in the coming hours and we’ll cleanse all the armed elements from the area,” a Syrian government official said Wednesday, according to the Associated Press, which noted it was impossible to reach residents and activists inside the neighborhood to learn whether a ground assault was under way. http://online.wsj.com/article/SB10001424052970203986604577252982021480396.html?mod=WSJEUROPE_hpp_MIDDLETopNews

An Egyptian judge is set to lift a travel ban against at least seven Americans accused of violating Egypt’s laws on foreign financing of civil-society groups, said lawyers for the defendants, a move that would go toward easing a diplomatic row that has strained Washington’s relationship with one of its closest security partners in the Middle East.http://online.wsj.com/article/SB10001424052970204571404577253410825116988.html?mod=WSJEUROPE_hpp_MIDDLETopNews

Treasury and gold investors were rocked out of their recent torpor on Wednesday as a series of large trades in the futures markets sent prices tumbling. At the Chicago Mercantile Exchange, an unusually big sale of more than 100,000 futures on U.S. government debt cascaded across traders’ screens shortly after 10 a.m. The selling spread to the cash markets where 10-year Treasury yields, which rise as prices fall, spiked to 1.99% from 1.93% in minutes.  The trades came just after the release of congressional testimony from Federal Reserve Chairman Ben Bernanke. Some traders said Mr. Bernanke appeared less focused on http://online.wsj.com/article/SB10001424052970203986604577253332515209056.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews

Confronted by declining tax revenue and rising employee costs, Stockton, Calif., is considering bankruptcy—while several other struggling California cities warn they could eventually face the same predicament. Stockton officials voted Tuesday night to take the initial step toward a bankruptcy filing by the city of 290,000, located in the agricultural Central Valley. The decision launches the first test of a new state law that requires cities to negotiate with employees, creditors and others to try to stave off a filing before making the move.http://online.wsj.com/article/SB10001424052970203833004577247464140386148.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews

Marketwatch.com
Rival Chinese manufacturing surveys released Thursday indicated mild improvement in February, though underling data showed surging input prices and deteriorating new orders, suggesting further weakening in the nation’s economy. The closely watched manufacturing Purchasing Managers’ Index (PMI) for February rose to 51.0 on the 100-point scale, up from 50.5 in January, according to the government-backed China Federation of Logistics & Purchasing. http://www.marketwatch.com/story/china-manufacturing-survey-rise-but-still-weak-2012-02-29

China’s banks likely issued roughly CNY500 billion ($79 billion) worth of new loans in February, well short of market expectations of CNY800 billion, the state-run Securities Times reported Thursday.  The report said the four largest banks–Industrial & Commercial Bank of China Ltd. (601398.SH), Agricultural Bank of China Ltd. (601288.SH), China Construction Bank Corp. (601939.SH) and Bank of China Ltd. (601988.SH) — extended just CNY180 billion over the month as of Tuesday. http://www.marketwatch.com/story/new-yuan-loans-seen-short-of-forecasts-2012-02-29

Reuters.com
Spot gold rose more than 1 percent on Thursday, recovering from its biggest fall in more than three years in the previous session when U.S. Federal Reserve Chairman Ben Bernanke failed to signal further monetary easing. Spot gold rose 1.4 percent to $1,719.19 an ounce, rebounding after a 5 percent fall on Wednesday, its largest one-day loss since November 2008. The Shanghai gold spot deferred contract stood at 349.30 yuan a gram, or $1,724.32 an ounce. U.S. gold gained 0.6 percent to $1,721.20. http://www.reuters.com/article/2012/03/01/us-markets-precious-idUSTRE80T1QZ20120301

Brent crude futures held steady above $122 on Thursday, drawing support from a faster-than-expected expansion of the U.S. economy and better factory data from China amid concerns of supply disruption from the Middle East. Positive numbers from two of the world’s biggest oil consumers have put a floor on Brent even after the contract surged 10.5 percent last month, the highest since February 2011. U.S. crude is under pressure from a surprise build in stockpiles last week. Front-month Brent rose 8 cents to $112.74 a barrel by 0325 GMT, after settling $1.11 higher at $122.66 in the previous session. U.S. oil slipped 2 cents to $107.04 a barrel after settling 52 cents higher at $107.07.http://www.reuters.com/article/2012/03/01/us-markets-oil-idUSTRE81C0T620120301

The economy grew slightly faster than initially thought in the fourth quarter and a gauge of factory activity in the Midwest hit a 10 month-high in February, pointing to underlying strength in the economy. Gross domestic product expanded at a 3 percent annual rate, the quickest pace since the second quarter of 2010, the Commerce Department said on Wednesday in its second estimate.  The reading, which was up from the 2.8 percent pace the government reported last month and reflected modest upward revisions to almost all components of GDP, added to the recent run of fairly upbeat economic reports. http://www.reuters.com/article/2012/02/29/us-usa-economy-idUSTRE7BM0AB20120229

Ireland may need to make further changes to its budget this year if the economy continues to deteriorate, the European Commission said on Wednesday in a draft of a report obtained by Reuters. Halfway through an unprecedented austerity drive, Ireland is implementing 3.8 billion euros ($5.08 billion) worth of tax hikes and spending cuts to reduce its budget deficit to 8.6 percent of gross domestic product (GDP) this year.Weaker than expected growth has forced Dublin to increase the target to 3.8 billion euros from the 3.6 billion initially proposed, and the commission suggested for the first time that further revisions to the government’s target may be required. http://www.reuters.com/article/2012/03/01/us-eu-ireland-report-idUSTRE82007Q20120301

Bloomberg.com
India’s (INGDPY)manufacturing expanded at close to the fastest pace in eight months, signaling the slowdown in growth in the nation’s economy may be moderating.  The Purchasing Managers’ Index was at 56.6 in February from 57.5 in January, HSBC Holdings Plc and Markit Economics said in an e-mailed statement today. A number above 50 indicates growth. http://www.bloomberg.com/news/2012-03-01/indian-manufacturing-expands-at-close-to-the-fastest-pace-in-eight-months.html

China, the largest foreign U.S. creditor, reduced its holdings of U.S. government securities last year for the first time since the Treasury Department began compiling the data in 2001. The world’s second-largest economy held $1.15 trillion Treasuries as of Dec. 31, down from $1.16 trillion at the end of 2010, according to Treasury data released yesterday. The U.S. revised the figures to show that China held about $51 billion more than reported earlier last month. The revision shows nation’s holdings peaked at $1.3149 trillion in July.http://www.bloomberg.com/news/2012-02-29/china-had-1-15-trillion-of-u-s-treasuries-in-december-revised-data-show.html

Federal Reserve Chairman Ben S. Bernanke affirmed that interest rates are likely to stay low at least through late 2014 without offering any indication that further monetary easing is under consideration. “At present, with the unemployment rate elevated and the inflation outlook subdued, the committee judges that sustaining a highly accommodative stance for monetary policy is consistent with promoting both objectives” for stable prices and maximum employment, Bernanke said today in testimony to the House Financial Services Committee in Washington. http://www.bloomberg.com/news/2012-02-29/bernanke-affirms-low-rate-pledge-without-offering-further-easing-options.html

Singapore’s economy surpassed Hong Kong’s for a second year as the Southeast Asian nation gained from a stronger currency, faster population growth and expansion of the casino and pharmaceutical industries. The CHART OF THE DAY shows Singapore’s gross domestic product was S$326.8 billion in 2011, about $260 billion based on average exchange rates or $252 billion based on year-end currency rates. In Hong Kong, GDP was HK$1.89 trillion, or $243.3 billion using the average and $243.8 billion based on Dec. 30 rates.http://www.bloomberg.com/news/2012-02-29/singapore-gdp-tops-hong-kong-for-a-second-year.html

Greece’s parliament approved cuts in pensions and health care a day after ratifying a 3.2 billion euro ($4.3 billion) package of spending reductions to move closer to a rescue package to avert financial collapse. Lawmakers voted 213-58 in favor of the law, Acting Parliament Speaker Grigoris Niotis said early today in remarks on state-run Vouli TV. http://www.bloomberg.com/news/2012-03-01/greece-parliament-approves-pension-health-cuts-in-race-for-second-bailout.html

U.S. homes in or nearing foreclosure accounted for almost a fourth of residential purchases in the last three months of 2011 as lenders approved more short sales, where the price is less than the amount owed. Deals for bank-owned and distressed properties rose to 24 percent of total home sales from 20 percent in the third quarter, according to RealtyTrac Inc. The transactions fell from 26 percent a year earlier, the Irvine, California-based data seller said today in a statement. http://www.bloomberg.com/news/2012-03-01/foreclosures-rise-to-24-of-u-s-home-purchases-as-short-sales-increase.html

Cnbc.com
The case for further quantitative easing “goes away” as the U.S. economy improves, Philadelphia Federal Reserve chief Charles Plosser told CNBC Wednesday. “I want to look at the growth rate of the economy and how that’s doing,” he said, and so far he sees an “economy doing better than it was in August” in terms of the unemployment rate, inflation and inflation expectations. “When there’s improvement in every case, then the case goes away for further easing,” said Plosser. http://www.cnbc.com/id/46578483

Cnn.com
Mitt Romney made two big changes to his tax plan last week, and according to a new analysis, they will be very expensive. Like $3.4 trillion expensive. Previously, Romney had said he would “maintain current tax rates on personal income” as president before moving to a “fairer, flatter, simpler tax structure” in the future.  Now Romney appears to be accelerating that timetable, announcing a move that would reduce the current top rate paid on income from 35% to 28%, with similar reductions across all tax brackets.http://money.cnn.com/2012/02/29/news/economy/romney_tax_deficit/index.htm?cnn=yes

USAtoday.com
For the first time since 1949, the United States exported more gasoline, heating oil and diesel fuel last year than it imported, the Energy Department reported today. Bloomberg writes that to offset weak U.S. demand, refiners exported 439,000 barrels a day more than were imported the year before. In 2010, daily imports averaged 269,000 barrels, according to thePetroleum Supply Monthly report. Imports of crude oil and related products fell 11% last year, reaching a level not seen since 1995.http://content.usatoday.com/communities/ondeadline/post/2012/02/us-exported-more-gasoline-than-imported-last-year/1

Telegraph.co.uk
The 50p higher rate of income tax is “damaging the economy” and delaying the recovery from recession, more than 500 entrepreneurs and business owners warn today. Given the state of the British economy, we urge George Osborne, the Chancellor, to consider scrapping the top rate of tax in his forthcoming Budget. The tax, which is in effect a 58p tax after national insurance is taken into account, puts wealth creators like us in a very awkward position. We believe the richest should help the poorest in society. One per cent of taxpayers are already responsible for 24 per cent of income taxes. But penalising high earners through an unfair, politically motivated tax puts populist politics before sound economics. http://www.telegraph.co.uk/comment/letters/9114040/Cut-the-50p-tax-rate-to-help-boost-business-and-encourage-entrepreneurs.html

The Governor of the Bank of England, Sir Mervyn King, has accused Britain’s banks of trying to profit at the taxpayer’s expense by rigging the Treasury’s attempts to boost small business lending. In a remarkable outburst at the Treasury Select Committee, Sir Mervyn launched a scathing attack on the banks and claimed that Labour had been too easily swayed by the forceful banking lobby when in power. He also dismissed the threat to the UK’s AAA sovereign credit rating – urging the Government not to be “slaves to the rating agencies”, while testimony by a colleague revealed a split among rate-setters over how quantitative easing (QE) should be conducted. http://www.telegraph.co.uk/finance/economics/9114395/Sir-Mervyn-King-accuses-banks-of-profiting-at-taxpayers-expense-by-rigging-lending.html

Mortgage approvals rose to the highest level in more than two years in January, as first-time buyers rushed to take advantage of a stamp duty holiday which is due to end in March. Bank of England data showed the number of mortgages approved for house purchase rose to 58,728 last month, from an upwardly revised 55,019 in December. Economists had forecast 53,800 approvals. It was the highest number since December 2009. Despite the rise, mortgage approvals remain below the average monthly level of around 88,000 since 1993. http://www.telegraph.co.uk/finance/economics/9113258/Mortgage-approvals-jump-in-stamp-duty-holiday-rush.html

Independent.co.uk
British banks joined the queue for hundreds of billions in cheap three-year loans from the European Central Bank yesterday as its funding lifeline for the region’s financial institutions surged past the €1 trillion (£847bn) mark. Lloyds Banking Group drew down €13.5bn in ECB loans, putting it among the biggest users, while HSBC borrowed another €350m following the €5.2bn it took in December. Barclays and Royal Bank of Scotland refused to comment on their participation. http://www.independent.co.uk/news/business/news/uk-banks-snap-up-billions-in-cheap-ecb-loans-7466888.html

Martin Weale voiced fears over “persistent” inflation yesterday in a hawkish speech underlining the growing splits at the Bank of England over the path of monetary policy. Mr Weale, a member of the monetary policy committee, voted for interest rate hikes at the Bank’s meeting last year before Europe’s debt crisis exploded last summer. Mr Weale added that the Bank may not extend its money-printing efforts beyond the £50bn in quantitative easing announced last month. Inflation is above the Bank of England’s 2 per cent target at 3.6 per cent. Martin Weale voiced fears over “persistent” inflation yesterday in a hawkish speech underlining the growing splits at the Bank of England over the path of monetary policy.http://www.independent.co.uk/news/business/news/bank-hawk-warns-on-prices-7466903.html

Theglobeandmail.com
Canadian home resale prices dropped in December from November, the second straight monthly decline, as small drops in high-priced Toronto and Vancouver provided a further sign of a cooling market, the Teranet-National Bank Composite House Price Index showed on Wednesday. The index, which measures price changes for repeat sales of single-family homes, showed overall prices slid 0.2 per cent in December from November, but were up 6.8 per cent from a year earlier. http://www.theglobeandmail.com/report-on-business/economy/housing/home-price-index-falls-in-december/article2353809/

Brazil posted a record primary budget surplus in January, the latest evidence President Dilma Rousseff’s push for fiscal restraint is helping pave the way for lower interest rates. Brazil posted a consolidated primary budget surplus of 26.016 billion reals ($15-billion) in January, the largest amount for the month since the central bank began tracking the data in its current form in 2001. http://www.theglobeandmail.com/report-on-business/international-news/latin-american/brazil-posts-record-primary-budget-surplus-in-january/article2354315/

Cs.com.cn
China`s money market sees the overnight repo rates slide to 2.60 percent Wednesday, hitting the new low in the past seven months, and the seven-day repo rates decline to be less than 3.5 percent.
Analysts said, as the matured money rises and fiscal deposits tend to decrease, the liquidity of banking system would maintains moderate easing in March. By Feb 29, the matured money in open market would be about 254 billion yuan, which tends to be the highest month in 2012. http://www.cs.com.cn/english/ei/201203/t20120301_3264101.html

Despite growth moderation, China’s top securities regulator has voiced strong confidence in the national economy, which he said is still one of the world’s most promising. The moderation in China’s growth is a desired outcome of the government’s macro-regulation, which will support sustainable and healthy development, Guo Shuqing, head of China Securities Regulatory Commission (CSRC), said in an exclusive interview with Xinhua. Guo said his confidence was due to the country’s huge market potentials as the government stepped up efforts to spur domestic demand to wean the the national economy off its reliance on exports. The domestic market potentials will give China some strength to resist the adverse impacts of complicated and volatile global economic situations, according to Guo. http://www.cs.com.cn/english/ei/201203/t20120301_3264036.html
Thehindu.com
Global rating agency Moody’s, on Wednesday, revised downward the ratings outlook for Central Bank of India to ‘negative’ from ‘stable’ on account of weak asset quality.  “The revised outlook considers that Central Bank of India’s comparatively modest capital level and weak asset quality will be further pressured in the current difficult operating environment,” Moody’s said in a statement.  “We view the bank as being more vulnerable than its similarly-rated peers (D—), given its relatively riskier loan book, which includes a high proportion of loans to troubled industries, such as the power sector,” the statement said. http://www.thehindu.com/business/Economy/article2947000.ece

After considerable dithering, Pakistan on Wednesday decided to switch to the negative list approach for trade with India and phase it out completely by December-end. Giving its approval to the long-pending decision, the Cabinet also cleared a 1,209-strong negative list of items in which bilateral trade is barred; thereby opening up business opportunities in an estimated 6,850 commodities against the 1,900-odd items now traded.   Information Minister Firdous Ashiq Awan said all stakeholders, including the naysayers — Textile and Industry Ministries —were on board and the decision to normalise trade with India was unanimous. http://www.thehindu.com/news/national/article2947102.ece

Yonhapnews.co.kr
South Korea posted a trade surplus of US$2.20 billion in February buoyed by a steady rise in overseas demand for locally made goods, a government report showed Thursday. The favorable trade balance is a turnaround from the $2.03 billion deficit tallied for the previous month, according to the monthly report by the Ministry of Knowledge Economy. Exports came to $47.18 billion last month, up a solid 22.7 percent on-year, with imports jumping 23.6 percent to $44.98 billion, the report said. Daily exports gained 1.3 percent on-year to $2.05 billion won from $2.02 billion tallied in the previous year. http://english.yonhapnews.co.kr/business/2012/03/01/12/0502000000AEN20120301002400320F.HTML

Business sentiment among South Korean builders made modest gains in February after plunging to a 17-month low the previous month, a report showed Thursday. The monthly construction business sentiment index (CBSI) gained 4.4 points from a month before to reach 66.7, according to the report by the Construction and Economy Research Institute of Korea (CERIK).
An index reading below 100 indicates pessimists outnumber optimists. http://english.yonhapnews.co.kr/business/2012/03/01/64/0501000000AEN20120301002800320F.HTML

Themoscowtimes.com
The Central Bank forecasts a current account surplus of $100 billion in 2012, First Deputy Chairman Alexei Ulyukayev said. Commenting on the indicator, which reflects the country’s overall net income, Ulyukayev said, “We anticipate a very positive current account. It will have a surplus of more than $100 billion.” The statements were made in an interview with the Rossiiskaya Gazeta daily published Wednesday. The current account surplus in 2011, according to preliminary figures, grew 43.8 percent to $101.1 billion compared with $70.3 billion in 2010. http://www.themoscowtimes.com/business/article/central-bank-sees-big-surplus/453884.html#ixzz1nqNb2p6s

Fin24.com
Western trade sanctions against Iran have begun to strangle its oil exports, a US advisory body said, amid signs the squeeze on Tehran is only set to intensify and could push global crude prices higher unless Washington eases its grip.  With crude prices trading at around 10-month highs and limited spare production capacity world-wide to make up for the embargo on Iran, the United States may seek to offer Iran’s major trade partners more room to move on sanctions. http://www.fin24.com/Economy/Iran-oil-exports-choking-on-sanctions-20120301

Tehrantimes.com
The Governor of the Iranian Central Bank Mahmoud Bahmani said that Iran will accept both gold and importing countries’ national currencies as payment for its oil. “In trade with foreign nations Iran will not limit itself to the U.S. dollar. Our trade partners may provide payment in its own currency. If the country wishes, it can pay us in gold, and we will accept it without any reservations,” Bahmani said. Iran’s move is part of its efforts to move away from the hegemony of the petro-dollar. The U.S. has applied sanctions on entities that trade with Iran. It also successfully pressured Belgium’s SWIFT, owner of the SWIFT system, to refrain from doing business with Iranian banks, Bloomberg reported.http://www.tehrantimes.com/economy-and-business/95948-iran-says-importers-can-pay-for-oil-using-domestic-currency